Social Security will fail to pay full benefits sooner than previously estimated

Washington: Social Security’s trust funds will become unable to pay full benefits starting in 2034, one year earlier than estimated last year, its trustees projected Tuesday, as the COVID-19 pandemic forces a reassessment of the giant federal program’s finances.

The U.S. government also said Medicare’s hospital insurance fund will be depleted by 2026.

“The pandemic and its economic impact have had an effect on Social Security’s Trust Funds, and the future course of the pandemic is still uncertain,” said the Social Security Administration’s acting commissioner, Kilolo Kijakazi. “Yet, Social Security will continue to play a critical role in the lives of 65 million beneficiaries and 176 million workers and their families during 2021.”

For the first time in 39 years, Social Security payments made to retired Americans this year, and every year after, will exceed tax revenues coming into the federal government.

Social Security has two programs, one for retirees and another that provides disability benefits.

The government said the Old-Age and Survivors Insurance Trust Fund will become unable to pay full benefits starting in 2033, a year earlier than projected last year, while the Disability Insurance Trust Fund will become depleted in 2057, or 8 years earlier.

Senior administration officials told reporters that the U.S. economic recession caused by COVID led to a drop in employment and therefore a decrease in payroll tax revenue, and that accelerates the depletion of Social Security’s reserves.

Image courtesy of thesatimes

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